Correlation Between First Bancorp and BOK Financial

Can any of the company-specific risk be diversified away by investing in both First Bancorp and BOK Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Bancorp and BOK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Bancorp and BOK Financial, you can compare the effects of market volatilities on First Bancorp and BOK Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Bancorp with a short position of BOK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and BOK Financial.

Diversification Opportunities for First Bancorp and BOK Financial

0.96

Correlation Coefficient

First Bancorp  BOK Financial

Almost no diversification

The 3 months correlation between First and BOK is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and BOK Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOK Financial and First Bancorp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Bancorp are associated (or correlated) with BOK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOK Financial has no effect on the direction of First Bancorp i.e., First Bancorp and BOK Financial go up and down completely randomly.

Pair Corralation between First Bancorp and BOK Financial

Given the investment horizon of 90 days First Bancorp is expected to generate 1.12 times more return on investment than BOK Financial. However, First Bancorp is 1.12 times more volatile than BOK Financial. It trades about 0.06 of its potential returns per unit of risk. BOK Financial is currently generating about 0.06 per unit of risk. If you would invest  4,430  in First Bancorp on September 19, 2024 and sell it today you would earn a total of  305.00  from holding First Bancorp or generate 6.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

First Bancorp  vs.  BOK Financial

First Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, First Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BOK Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BOK Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking signals, BOK Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Bancorp and BOK Financial

The main advantage of trading using opposite First Bancorp and BOK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, BOK Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BOK Financial will offset losses from the drop in BOK Financial's long position.

The idea behind First Bancorp and BOK Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .